TREASURY

ECOFIN (8 November 2011)

George Osborne: The Economic and Financial Affairs Council was held in Brussels on 8 November 2011. The following items were discussed:
	Financial Transaction Taxes (FTTs)
	The Commission presented its proposal on FTTs. Under the proposal, the tax would apply where at least one of the parties to the transaction was established in a member state. The tax rate would be 0.1% of the value of equity and bond transactions, and 0.01% on derivative contracts on the notional value of the transaction. I made it clear that the Government do not support the Commission’s proposal. As stated in the Commission’s own assessment, it would reduce growth and cut jobs. Other member states, including Bulgaria, the Czech Republic, Italy, Luxembourg, Latvia, the Netherlands, Romania and Sweden also voiced concerns with the current proposal. I asked the presidency and the Commission to work on a timetable to resolve this issue quickly, as it was clear that the Council would not be able to reach unanimous agreement on this proposal. The presidency noted the request for a fast resolution, and suggested the working group meeting on 5 December should consider options and alternatives to put to Ministers for further consideration.
	Energy Taxation Directive (ETD)
	The presidency decided to remove the orientation debate on the ETD from the agenda. This directive would require member states to tax energy products by taking into account both CO2 emissions and energy content. Discussion will continue with officials at working group level.
	Follow up to the October European Council. 23 October and Informal meeting of EU Head of State or Government on 26 October
	Ministers discussed the banking package that was announced on the 26 October by EU Heads of State and Government. The discussion focused on all three aspects of the banking package: access to term funding for banks; bank recapitalisation; and state aid guidelines. I made it clear that the Government would support co-ordinated national guarantee schemes, where appropriate, to support banks accessing term funding. However, the Government could not support a scheme which placed euro area bank liabilities on the UK. I underlined the importance of the bank recapitalisation aspect of the package. This should be undertaken while mitigating the risk of deleveraging. I also emphasised that the state aid rules should continue to apply fully. As a next step,
	the Council asked the Economic and Financial Committee to explore the options for addressing the issues related to access to term funding.
	Follow up to the G20 summit 3-4 November in Cannes
	Ministers discussed the outcomes from the G20 leaders’ summit held in Cannes on 3-4 November. The outcomes from the summit include: an action plan for growth and jobs; building a more stable and resilient international monetary system; reforming the financial sector; promoting more efficient commodity markets; strengthening the international trading system; and addressing climate change and development challenges. The G20 agreed that additional resources for the IMF could be mobilised in a timely manner; Finance Ministers will work on deploying a range of options by their next meeting.
	Financial assistance to Greece — disbursement of next instalment
	The presidency removed this item from the agenda. Euro area countries and the IMF made it clear that they would not disburse the next instalment of the Greek financial assistance programme until there was greater certainty about the new Greek Government. Once the new Government have endorsed the measures to put Greek debt on a sustainable footing, as agreed at the informal meeting of EU Heads of State and Government on the 26 October, the sixth tranche can be disbursed.
	Economic governance — surveillance of macroeconomic imbalances: design of the  “scoreboard”
	The Council agreed conclusions on the scoreboard for assessing macroeconomic imbalances. Ministers agreed that current account surpluses would not lead to sanctions. Ministers also agreed the scoreboard for the excessive imbalances procedure. The Government support these measures as they will help to restore and maintain macroeconomic stability in the EU. The six-pack on economic governance, including the scoreboard, will be implemented in mid-December.
	Preparation of the 17th Conference of Parties (COP-17) of the United Nations Framework Convention on Climate Change (UNFCCC) in Durban. South Africa
	ECOFIN agreed conclusions on climate change in preparation for the UN conference in Durban, 28 November to 9 December. The conclusions endorse a report on finance provided by the EU and its member states as part of their “fast start” commitments. These commitments will aid climate mitigation and adaptation measures in developing countries.
	Annual Meeting of EU and European Free Trade Association (EFTA) Economy and Finance Ministers
	This meeting took place before the formal ECOFIN, and discussed improving regulation to secure financial stability. The Commission outlined the comprehensive response that was set out at the informal meeting of EU Heads of State and Government on 26 October. The President of the European Central Bank, made it clear that the Basel III rules on capital requirements for banks should be minimum, not maximum requirements. There is a risk that banks might deleverage as a consequence of the current economic environment and uncertainty about capital requirement rules. Following this, there was a roundtable discussion with Finance Ministers from Liechtenstein, Iceland, Norway and Switzerland. EFTA countries shared their views on the recent financial crisis and economic developments in euro area countries, and the impacts of these on their own economies.
	Follow up to the Eurogroup meeting ,  7 November
	Ministers discussed political and economic developments in the euro area, as a follow-up to the Eurogroup meeting. I underlined that the deterioration in the euro area was having a huge impact on the UK and other non-euro area countries. As such, all 27 countries have a strong interest in the situation being resolved. I made it clear that the euro area needed to give more detail on how they would implement the package agreed at the informal meeting of EU Heads of State and Government on the 26 October.

ECOFIN (18 November 2011)

Mark Hoban: The Economic and Financial Affairs Council—Budget meeting will be held in Brussels on 18 November 2011. There is no provisional agenda at present. The following items are on the agenda:
	Preparation of the Conciliation Committee meeting with the European Parliaments
	The Council will aim to agree a final position on the draft budget for 2012, as part of negotiations with the European Parliament via a concurrent Conciliation Committee meeting. The Government will seek a final budget that delivers real budgetary restraint at EU level, supporting ongoing efforts to consolidate public finances across many member states, and that respects the principles of sound financial management.
	As part of this process, the Government expect Ministers to be invited to discuss the Letter of amendment No. 2 to the preliminary draft budget for 2012, which handles mainly administrative costs relating to the expected accession of Croatia to the EU. The Government believe that these amendments should not increase the level of EU administrative expenditure.
	Ministers are also expected to be invited to discuss Letter of amendment No. 3 to the preliminary draft budget for 2012, which concerns updates for estimated needs for agricultural expenditure and international fisheries agreements, reflecting changing market factors, revised estimates of needs for some direct payments, and legislative decisions this year, which are expected to affect this policy area next year. The Government are broadly supportive of these technical amendments.
	Finally, Ministers may be invited to discuss this preliminary draft amending budget No. 6 for 2011, which would amend the 2011 EU budget to reflect latest implementation capacity and financial needs for the remainder of this year. The Government believe that any extra funding needs should be met fully via redeployments within existing budgets.
	Outcome of the Conciliation Committee meeting with the European Parliaments
	The Council will seek to agree to the outcome of the Conciliation Committee conciliation.
	Any other business
	At this time, the Government do not expect any issues to be raised under this agenda item.

Banking Act 2009 Reporting

Mark Hoban: The Treasury has laid before the House of Commons a report required under section 231 of the
	Banking Act 2009 covering the period from 1 April 2011 to 30 September 2011. Copies of the document are available in the Vote Office and the Printed Paper Office.

Personal Independence Payment

David Gauke: The Welfare Reform Bill introduces a new disability benefit, personal independence payment (PIP), which will replace disability living allowance (DLA) for working-age claimants from 2013-14. There are a number of existing tax reliefs relating to DLA, and suitable amendments to a number of pieces of tax legislation will be needed on the transition to PIP.
	In line with the Government’s approach to tax policy making, legislation relating to these provisions will be published in draft form in due course, with appropriate amendments made in a future Finance Bill (or by Treasury Order if appropriate).
	In line with this, the relevant provisions have been removed from the Welfare Reform Bill.
	However, the Government have decided to retain the provision in the Welfare Reform Bill that will make PIP tax exempt, in order to provide absolute certainty that these payments will be free of tax.

Private Finance Initiative

George Osborne: Today, I am announcing the Government’s intention to reform the private finance initiative (PFI).
	The Government are committed to continuing sustainable investment in the assets we need to deliver public services, including our schools, hospitals and roads. However, we need to ensure that this investment is cost-effective, and that the taxpayer is getting maximum value for money. The Government share some of the commonly identified concerns that PFI contracts can be too costly, inflexible and opaque.
	Reforming the PFI model will be the next in a series of steps that this Government have already taken to improve the cost-effectiveness and transparency of PFI.
	We abolished PFI credits at the spending review 2010 to create a level playing field for all forms of public procurement. We also introduced new assurance and approval arrangements in April this year, to strengthen the scrutiny given in the approval process of all projects, including those using private finance.
	In July, to improve transparency, the Government published, for the first time, the unaudited Whole of Government accounts which included an assessment of the PFI liabilities, and we announced a plan to deliver £1.5 billion of savings from the existing stock of PFI contracts in England.
	The Government will expect a new delivery model to draw on private sector innovation but at a lower cost to the taxpayer, offering better value for our investment in public services. The Government’s approach to reform will be guided by the following principles, to create a model that:
	is less expensive, and that uses private sector innovation to deliver services more cost-effectively;
	can access a wider range of financing sources, including encouraging a stronger role to be played by pension fund investment;
	strikes a better balance between risk and reward to the private sector;
	has greater flexibility to accommodate changing public service needs over time;
	maintains the incentive on the private sector to deliver capital projects to time and to budget and to take performance risk on the delivery of services;
	delivers an accelerated and cheaper procurement process; and
	gives greater financial transparency at all levels of the project so that the public sector is confident that it is getting what it paid for, and that the taxpayer is sure it is getting a fair deal now and over the longer term.
	In order to bring about that change I am announcing the Government’s intention to conduct a broad-based engagement process with interested parties, led by the Treasury, to bring forward proposals for a new approach in using the private sector in the delivery of public assets. In considering what the future model should be it will be important to learn from the past and make full use of the wealth of experience that exists across the public and private sectors, and internationally. Where PFI has been successful—in getting projects delivered to time and to budget, and creating the correct disciplines and incentives on the private sector to effectively manage risk—we will look to retain these benefits.
	The Government will be launching a call for evidence on 1 December that aims to capture the learning and lessons of the past 20 years of PFI. We will look to use those lessons to help inform the development of a new model that addresses the concerns of PFI. We invite those across the private and public sector that have strong ideas on how the future model should work to come forward with proposals and contribute to the development of a new delivery model.

ENVIRONMENT FOOD AND RURAL AFFAIRS

Marine Conservation Zones

Richard Benyon: As part of the Government’s commitment to implementing in full the provisions of the Marine and Coastal Access Act, we are creating a network of national protected areas in British seas to ensure our underwater wildlife flourishes in years to come. We are clear that looking after the wildlife and habitat in our seas is just as important as looking after those on land.
	The Government’s first step to identifying new marine conservation zones (MCZs) in English waters was taken forward through four regional MCZ projects managed by the statutory nature conservation bodies, who are Natural England and the Joint Nature Conservation Committee. The regional projects provided their recommendations for proposed sites for MCZs on 8 September. These have been reviewed by the independent
	science advisory panel (SAP) and their advice to the SNCBs and DEFRA is being published today on DEFRA’s website.
	The Marine and Coastal Access Act requires the establishment of a network of conservation sites in the UK marine area. In English waters the network will comprise European marine sites, sites of special scientific interest, sites designated under the Ramsar convention and marine conservation zones (MCZs). The Act requires that the network must conserve or improve the UK marine environment and protect a range of representative features.
	The regional MCZ projects have done excellent work in bringing stakeholders together and making site recommendations, but it is clear from the SAP’s advice that there are a number of gaps and limitations in the scientific evidence base supporting the MCZ recommendations.
	It is important that we get this right. It is vital that we have an adequate evidence base for every site if we are to create successful well-managed MCZs. An adequately robust evidence base will be essential when we come to implement management measures.
	DEFRA will therefore be commissioning significant additional work to support MCZ designation including an in-depth review of the evidence base for all the regional projects’ site recommendations and committing additional resources to carrying out seabed and habitat monitoring.
	Protecting our marine environment is essential and the Government remain fully committed to establishing MCZs to contribute to an ecologically coherent UK network. However, the need to strengthen the evidence base for the MCZ recommendations means this is going to take longer than the ambitious target first put forward. We are likely to be able to designate some MCZs fairly quickly where the supporting evidence is adequate. However, for others we anticipate that more investigation will be needed before they can progress towards designation.
	Natural England and the Joint Nature Conservation Committee will provide the MCZ impact assessment and their formal advice in July 2012. This is six months later than previously planned and this revised timetable will enable them to address the recommendations from the independent review of the evidence process for selecting marine Special Areas of Conservation (published July 2011) and take account of any further evidence obtained from the work that DEFRA is now commissioning. We will give careful consideration to all the advice received before undertaking formal public consultation on MCZs by the end of 2012. This consultation will include all sites recommended by the regional projects with clarity on how and when work on them will be taken forward. It is envisaged that the first MCZ designations will take place in 2013.
	DEFRA and delivery partners will work together ensuring that early management measures are put in place to provide effective levels of protection for designated sites and continuing to build the evidence base for future designations. DEFRA will also take the opportunity, working with stakeholders and SNCBs, to look at other marine features which may benefit from spatial protection.
	This phased approach to designation will also allow more scope to shape the English network taking account of sites being considered by the devolved Administrations and neighbouring member states.

Natural Capital Committee

Caroline Spelman: The natural environment White Paper, published on 7 June 2011, set out the Government’s intention to establish an independent Natural Capital Committee. It will commence its work in early 2012. As part of this, I will be making appointments to this new committee, and these will be advertised shortly.
	The natural environment White Paper sets out our commitment to putting natural capital at the centre of economic thinking, and at the heart of the green economy. The Natural Capital Committee will enable us to achieve this goal by advising the Government on the state of natural capital in England. The Committee will report to the Economic Affairs Committee, chaired by the Chancellor of the Exchequer.
	The Committee will:
	Provide advice on when, where and how natural assets are being used unsustainably.
	Advise the Government on how they could prioritise action to protect and improve natural capital, so that public and private activity is focused where it will have greatest impact on improving wellbeing in our society.
	Advise the Government on research priorities to improve future advice and decisions on protecting and enhancing natural capital.
	Further information on the natural environment White Paper can be found on the DEFRA website.

FOREIGN AND COMMONWEALTH AFFAIRS

UK Relations with Colombia

Jeremy Browne: I wish to update the House on the UK’s developing partnership with Colombia, and the opportunities this provides to both our countries.
	In last November’s Canning lecture, the Foreign Secretary set out his vision for a step change in the UK’s relationship with Latin America. As part of our re-engagement with the region, the relationship between the UK and Colombia is broadening and deepening. Colombia has the potential to be one of Latin America’s great success stories and we are working in partnership with the Colombian Government to help it achieve this aim. Colombia is already an emerging power with a diversified economy, a growing middle class and a strong, democratic central Government. Colombia’s economy grew by 4.3% in 2010, with similarly strong growth forecast over the next five years. It has achieved macroeconomic stability.
	It is important not to forget the context in which this has taken place. Colombia is addressing a legacy of over 50 years of armed conflict. In the 1990s the country was on the brink of political, social and economic collapse. The numbers of paramilitary and guerrilla forces grew and Colombia endured increasing and apparently unstoppable violence, cocaine production and trafficking, poor economic performance and massive internal displacement. Colombia’s citizens suffered serious
	human rights abuses, including the extrajudicial killing of thousands of civilians by members of the armed forces.
	A new Colombia is emerging. Since the 1990s, the security situation has changed dramatically. There has been significant reduction of cocaine production, while murder and kidnapping rates have sharply decreased. The FARC guerrilla group has been significantly weakened.
	The country’s progress to date in dealing with these issues should be recognised, but we should not shy away from the scale of the remaining problems. High numbers of candidates were murdered in the months before last month’s local elections. Too many Colombian soldiers continue to lose their lives at the hands of the FARC. Large numbers of alleged cases of extra judicial killings are yet to be prosecuted. Deadly attacks on human rights defenders have increased. Making progress in these areas is fundamental to Colombia realising its full potential.
	The Colombian President, Juan Manuel Santos, stated his strong commitment to reform and modernisation in his inauguration speech in 2010. He has set out an ambitious programme in the areas of governance, equality, prosperity and security and committed to a policy of zero tolerance of human rights abuses. President Santos has improved relations with neighbouring countries like Ecuador and Venezuela and enhanced the active and constructive role Colombia plays internationally.
	We have already seen important examples of these pledges being put into practice. The Santos Government have passed the flagship Victims and Land Restitution Law, which aims to return land to millions of displaced people and compensate victims. The state intelligence agency (DAS), which had been responsible for some of the worst human rights abuses, has been disbanded. In September, in a landmark judgment, its former head was found guilty of criminal conspiracy for providing right-wing militias with lists of leftist activists and trade union leaders, some of whom were subsequently killed or imprisoned. The rate of prosecutions for extrajudicial killings has risen sharply.
	Colombia is at a pivotal moment of change at which it enjoys the leadership of a strong president with a strong mandate, with whom we share common values. The UK is taking the opportunity this offers to develop further our close relationship with Colombia.
	Prosperity—Partnership for Growth
	Promoting trade is vital for the UK’s economy and prosperity. Our approach is to ensure that Colombia’s economic growth, development, human rights and the rule of law are complementary and mutually reinforcing.
	At present Colombia is only the UK’s fifth largest export market in Latin America. The export of UK goods to Colombia grew over 30% in 2010 and has grown even faster in the first half of 2011. But there is more potential to be realised. We support the EU/Andean multiparty trade agreement, which will help to increase our commercial exchanges. Education, science and innovation are central to the growth of both our economies. Colombia has pledged $89 billion for investment in these sectors by 2015. Educational exchange will be a central part of our relationship. We will explore opportunities to develop partnerships between UK and Colombian research institutes and spin-off companies.
	Human Rights—Shared Values
	We welcome the efforts of the Santos Government to address human rights abuses through a wide-ranging reform programme and a national human rights policy, working with civil society and the international community. This commitment has already translated into an improved dialogue with civil society, better relations with the judiciary and an impressive legislative record.
	We have long been a strong advocate of human rights improvements in Colombia and a close partner of the Colombian Government and civil society in delivering them. This is a central part of our relationship and will not change.
	Very serious problems remain, on which we encourage further progress. This includes ensuring the security of human rights defenders, protecting the cultural and territorial rights of indigenous groups, tackling impunity and improving access to justice.
	Security and International Partnerships—Common Purpose
	At the UN and elsewhere, the UK and Colombia continue to have a strong partnership on international security matters and on counter narcotics. We are working together closely at the UN Security Council.
	Counter-narcotics work in Latin America is an integral part of the UK’s drugs strategy. Colombian cocaine poses a direct and significant threat to the UK. With our help, in recent years Colombia has arrested high-profile drugs traffickers, dismantled organised crime networks and seized over 25 tonnes of cocaine per year. Our support for this work will continue.
	We are developing our partnership to achieve shared objectives on other international issues such as climate change and biodiversity. We work together in international fora to pursue green growth, combat climate change and secure our energy supplies for the long term. We are both committed to a legally binding international climate agreement and have strategies for delivering low carbon growth.
	Our relationship with Colombia has long historical roots and is broad and rich in substance. It is predicated on our common aim of improving prosperity and security in the UK, Colombia and further afield. The Government look forward to developing our broad-based relationship further and the visit of President Santos to the UK later this month will make a significant contribution to this process.

HOME DEPARTMENT

Misuse of Drugs

Theresa May: I am pleased to announce that the final version of the joint Working Protocol, developed and agreed between this Government and the Advisory Council on the misuse of drugs, has been deposited in the House Library today.
	The new Working Protocol sets out the framework within which the Government and the Advisory Council commit to engage in the provision and receipt of its expert advice to Government on drug-related issues; maintain the expertise and membership of the Council;
	and intend to work together under the new power under the Misuse of Drugs Act 1971 to invoke temporary control of a new and emerging psychoactive substance to help prevent harm.
	Hon. Members may wish to note that a draft of the protocol was made available (DEP2011-0598) to the House to help inform the scrutiny of related provisions in the Police Reform and Social Responsibility Act 2011.
	I am pleased to inform the House that the Government and the Council will continue to embed working practices in accordance with the Working Protocol. The Working Protocol will support the Council in the delivery of its work programme that addresses both the work priorities set by Government as well as work of its own volition. The Council has recently delivered a thematic report on new psychoactive substances, which I commissioned, and that will now inform a cross-Government strategic response to this problem. It is also working to provide expert advice to deliver recovery based support to dependent users, which is central to this Government’s drug strategy.
	Professor Les Iversen, chair of the Advisory Council, and I welcome the protocol in supporting our respective roles and responsibilities. At the heart of the protocol is a shared commitment to ensuring that the best evidence-based advice is available to Government on drug misuse, working together with the common purpose of reducing drug-related harms in the UK.

JUSTICE

High Court and Court of Appeal Civil Division (Fees)

Jonathan Djanogly: I have published today a consultation paper detailing proposals to increase fees in the High Court and Court of Appeal Civil Division.
	These two jurisdictions hear the most complex civil court cases, and are particularly resource-intensive to run. The fees structure does not currently reflect the cost of providing services in these courts, meaning that there is a significant gap between costs and fee income. We propose to make targeted changes to these structures, affecting around 30 fees, in order to align more closely costs and income. Taken together, the proposals would reduce the current taxpayer contribution to HMCTS by £12 million to £14 million.
	The cost of running the civil and family courts is currently around £612 million a year. Of this amount, 80% is funded through court fees with the remaining 20%, around £121 million, funded by the taxpayer. The Government’s long-term aim is to reduce this taxpayer subsidy by ensuring that fee income covers 100% of the cost of providing civil court services, minus the income foregone to the remission system. This is a system of fee waivers and reductions which ensures that access to justice is preserved for the least well off; around 160,000 fee remissions are granted per year.
	Reducing the taxpayer subsidy of the courts service will be achieved through a combination of cost reductions (for example, reform of the courts estate, changes to civil and family justice processes) and fee increases. This
	will offer a fairer system to the taxpayer by targeting their contribution where it is most needed, and will ensure that, as far as possible, users pay for the service they receive while access to justice is protected for the most vulnerable.
	As the cost of running civil court services is projected to decrease due to planned efficiency savings taking effect, it would be premature to increase all civil court fees to cover costs in a single round and risk recovering more than the cost of running the service. Instead, we propose to make phased and measured increases to fees over the short to medium term in order to balance correctly cost reduction and fee increases. My Department has already taken several such steps:
	September 2010—inflationary increases to fees paid in private family cases, which projected an increase in fee income of around £6 million per year.
	April 2011—inflationary increases to most civil, family and non-contentious probate court fees since each fee’s last increase, which is projected to increase court fee income by around £21 million per year.
	This consultation paper represents the next step in this strategy. The paper contains 17 proposals affecting just over 30 civil fees in the High Court and Court of Appeal Civil Division, focusing on areas where there is a noticeable gap between fees and the cost of providing services in particular cases. The proposals cover diverse areas of work in these jurisdictions; the most notable are:
	introduction of higher bands of issue (entry) fees in the High Court. The current highest issue fee paid is £1,670, for money claims over £300,000. We propose to add further bands, meaning that the highest entry fee paid would be £10,000, for claims over £l billion;
	introduction of time-related hearing fees in the High Court and Court of Appeal Civil Division to reflect the increased cost involved in providing longer trials. The current hearing fee in the High Court is £1,090; we propose to introduce banded fees based on the time a court hearing is projected to last. The highest proposed fee is £10,900, for a case which lasts over 10 days.
	Making increases in this way will mean that those whose cases consume a greater resource in court will
	pay more proportionally for the cost of processing their case, while the remission system remains in place for those who cannot afford to pay fees.
	It is available online at http://www.justice.gov.uk/consultations.

TRANSPORT

Rail Reform

Justine Greening: Our railways are currently the most expensive in Europe. That is something we can and must tackle. The recent review by Sir Roy McNulty found scope to cut rail costs by 30%—up to £l billion a year. My Department is committed to working with the rail industry to develop a strategy to deliver a better value railway for the benefit of passengers, taxpayers and the wider economy.
	In furtherance of that strategy, my Department has undertaken to develop and publish detailed proposals on delivering a sustainable railway including reform of Network Rail. I am today announcing my intention to publish a Command Paper that sets out those proposals early next year.
	It will allow time for greater consideration of other issues central to the question of rail reform. This will also allow the Command Paper to reflect properly the consequences of my decision following our consultation on a national high-speed rail network.
	As part of the development of a comprehensive strategy for rail, and alongside the Command Paper, I also plan to consult on the scope to devolve responsibility for some rail passenger services in parts of England to sub-national bodies, and on issues relating to the review of fares and ticketing announced in May. In addition, the ORR expects to consult later this year on possible changes to its role, particularly in respect of future franchises.